EPFO Notify the procedure for the Pension on Higher Wages settlement for Eligible Applicant
Circular regarding application for validation of option/joint options - deposit /transfer of the due contribution with interest into pension fund dated 9.5.2023
EPFO Notify the procedure for the Pension on Higher Wages settlement for Eligible Applicant
On May 9, 2023, the Employees Provident Fund Organisation (EPFO) issued a circular notifying the method for settling Pension on Higher Wage effective 1.9.2014. In relation to Applications for Validation of Option / Joint Options – Deposit / Transfer of Due Contribution with Interest into Pension Fund.
What is Instructed in the Circular:
1. The revision for the applicability of pension on higher salaries effective from 1.9.2014 for employees whose applications for higher pension will be validated under the rules of paragraph 11 of the Employees’ Pension Scheme, 1995 and who are found eligible.
2. Pension on higher wage; employer contribution will be 9.49% of each member’s base wage, dearness allowance, and retention allowance.
3. The higher contribution shall be applicable to basic wages, dearness allowances, and maintaining allowances in excess of fifteen thousand rupees per month.
4. In all qualified cases of Joint Options, an extra 1.16% contribution to the pay above Rs. 15,000/- p.m. of the employer share to the Pension Fund will be required.
5. Applications/Joint Options: Where previous remittances on higher salary were made in the Provident Fund but not in the Pension Fund, adjustments for the 8.33% contribution from the employer’s share will be required.
6. In the case of continuous service, the current employer will continue to pay pension contributions to greater wages in the future, including the enhanced 1.16% on wages in excess of Rs. 15000/- per month.
How EPFO will calculate the dues:
After verifying the wage facts supplied by the employer, the EPFO filing officer will calculate the dues based on:
1. Case-by-case processing in a single file with application ID
2. For exempted enterprises, based on all documents available with the employer and trust.
3. Dues will be calculated month by month at 8.33% of the employer’s share on higher pay (w.e.f. 16.11.1995, or the day the salary exceeds the wage cap, whichever is later).
4. As per records, 1.16% of the employer share on higher compensation beyond Rs. 15,000/- p.m. (as of 01.09.2014) will be computed towards increased contribution.
5. The total of 5 (i) and 5 (li) above will be deducted from all payments already placed into the Pension Fund.
6. The interest to be charged on dues shall reflect the interest earned by members on their PF accumulations.
Application Validation Classification / Joint Options
The Field Officer will investigate each case and categorize it as follows:
1. Calculated dues have already been fully remitted to the EPS in the applicable months.
2. Dues have not been submitted to the EPS, but contributions to higher wages have been fully remitted to EPF, and the PF account has an acceptable balance.
Based on the foregoing instructions, the EPFO filing officer will categorise the cases and notify the applicant via online system (e-portal) for submission of the applicable and modified dues in all forms of EPS subscribers.
Furthermore, the pensioner would be permitted to remit the dues within three months of the date of validation.
Following receipt of the diversion dues, the EPFO will account for and adjust the EPS fund using the Appendix -E functionality. EPFO will take great care when revising the EPS fund to ensure that the correct entries are made in each circumstance.
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